The Tough Decision: Heavy Shakti Machines Pvt. Ltd.

The Tough Decision
Mr. Sinha banged the telephone receiver on the phone and got up of his seat. He looked very disappointed and worried. This was the fifth time in a row when his company had lost the bid for delivering a big order for heavy machines of an automobile manufacturing plant. This was a big order and getting it was crucial for the company to reclaim its past reputation as a major heavy machines manufacturer in North India. He walked towards the window and rolled up the blinds which towards the main gate of the works plant of his company. He could sense the uncertain future of the company which he had been a part of for nearly two and a half decades.
Mr. Sinha was the managing director of Heavy Shakti Machines Pvt. Ltd which was
Getting a job here was an inspiration of most of the engineering graduates and technical workers as it enabled them to be associated with a name which was a leader in the area of engineering. It had collaborated with a Russian company in the 1980's for support in technology. It later collaborated with another German firm which was the world leader in heavy machines manufacturing. The company also had a good reputation of being employee friendly. The company had around 10,000 regular employees including both the management and the worker. There were also contract employees to help the regular workmen during machining who generally belonged to nearby areas. In spite of newer machines being used, which required minimal human inputs, there were almost three operators per machine each to take care of the three shifts. The union was strong and hence the management found it difficult to increase the effective work output from the employees. The union leader Chandra Bhushan Pandey had strong political affiliations. On some occasions the company had to pay fine for late delivery because of slow output. The company also had to roll back some of the policy changes in past which it wanted to implement due to stiff opposition from the union. Also on the management side the number of higher level officials had increased because of the policy of time bound promotions. Hence the number of
An increasing number of companies started ordering more and more of the new machines. HMS till then had done very less in order to produce such machines in-house. Hence seeing the immediate threat the company bought the required technology from its German collaborator. The deal consisted of a clause according to which the collaborator would get a percentage of profit from the sales of those machines for a period of seven years. Though the percentage was small, however it added to the cost of the machines. The market share of conventional machines started declining as compared to the computer aided machines. Added to this there was slowdown in manufacturing sector which resulted in a decrease in the yearly order book of